Construction of a building empire

Written on the 6 July 2009

“In franchising you’re in business for yourself, but not by yourself,” says Hotondo Homes founder and franchisor Michael Renwick.

HOTONDO Homes is Australia’s largest network of home builders. Established in 1979, it was franchised in 1993. The company has 100 franchisee builders throughout metropolitan and regional Australia. In 2008, the company won the Franchise Council of Australia ‘Service Franchisor of the Year’ Award.

“We will fill up holes wherever we need to. We have a dozen builders in Queensland and we need to double that,” says Renwick.

Renwick is on a mission to become a leading force in Australia’s building industry through franchising. Hotondo Homes is one of Australia’s major home builder networks. With a current annual turnover of $250 million, the company continues to grow steadily. In 2008, it built more than 9000 homes across metropolitan and regional Australia through its franchise network.

“We plan to add another five or six in the next 12 months on the Gold Coast, Sunshine Coast, and Gatton. We have a medium-sized business model that is sustainable with around 10 houses,” says Renwick.

“The reality for us is that you need people who can build. It’s always difficult but we go for builders as the primary source for recruits. We’ve got to recruit vigorously and we’re all about local builders.”

Hotondo Homes became a franchise network after almost 15 years as a home building business. Taking over the business from his father, Michael decided to hone the franchising model about 10 years ago, putting in place business systems that would support a successful network. He developed new fee structure and agreements for franchisees across Australia and set about recruiting.

“At some point we stopped building and started franchising,” he says.
“Building must be the most difficult area of franchising. We have to provide exceptional service. We do a lot of market research and customer satisfaction surveys. The last thing people will stop paying for in tough times is their house and if they can wade out the next 12 to 18 months, they will be in a better position. My aim was to create a quality service where all stakeholders benefited.”

As a franchising pioneer in the building industry, Renwick concedes that the journey has not been easy. As a rule, traditional franchising models which work for retail and service industries do not adequately suit his business.
He has had to forge new and innovative ways of making franchising work for the building environment.

“We have had to create a franchising model that is really different to other industries,” he says.

“A retailing-service franchise model doesn’t work for us because the building industry is so different to these fast turnover industries. We are in the business of creating a product that often takes more than a year to prepare and build, and we do it under full public scrutiny. That means the model has to take into account some very different ways of operating.”

Renwick says franchisees benefit from a number of financial advantages over independent builders. These include better buying power for building materials, financial advice (including benchmarks in comparison to others in the network) and savings in general business costs.